Mandarin Oriental International Limited - Mandarin Oriental Hotel ...

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With the exception of Paris, which will be operated under a long-term lease agreement,
all 14 properties currently under development are management contracts requiring limited
capital from the Group. This is a clear indication of the strength of our brand and the fees
generated by our management activity will be a significant source of our future revenue
growth. At the same time, we are well positioned to take advantage of investment
opportunities that arise in strategic locations. The Group remains a significant owner of
hotel properties, particularly in major cities, and benefits from the long-term capital
appreciation such assets normally provide. Ownership also ensures the continuing control
of our brand heritage and gives us increased credibility with third party hotel developers.
Overall, the operation of both owned and managed hotels remains an essential strategy of
the Group.
The growth of the Group’s portfolio of Residences at Mandarin Oriental continues, with
many of the new hotels under development including a residential component. The
luxury development adjacent to Mandarin Oriental Hyde Park, London, announced in
2006, will house some of the world’s most sophisticated apartments, serviced by
Mandarin Oriental, and add services and amenities that will benefit our hotel’s guests and
enhance the hotel’s value.
4. Achieving a strong financial performance
Mandarin Oriental achieved a strong financial performance in 2006, with the improved
results of the Group’s growing international portfolio offsetting the impact of the ninemonth
closure of the Group’s 100%-owned Mandarin Oriental, Hong Kong. Excluding
gains from disposals, profit attributable to shareholders in 2006 was US$45 million
compared to US$41 million in 2005.
The Group completed the sale of The Mark, New York in 2006 for after-tax proceeds of
US$98 million, resulting in a post-tax gain of US$35 million. This resulted in an overall
profit for the year of US$80 million compared to US$77 million in 2005, which had
included a post-tax gain of US$36 million from the disposal of our 40% interest in a
Hawaii hotel.
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